Glossary of Distressed Real Estate – J – K

Joint Liability – Liability by two or more persons for the same debt or claim.

Joint and Several Liability – A claimant or creditor may proceed legally for recovery of a debt against all persons, i.e. “joint liability,” or against only certain ones of the group, i.e. “several liability.”

Judgment – In Oregon, a legal document for a sum of money, that if properly recorded in the public records, becomes a lien, or “charge,” against all non-exempt property that the judgment debtor owns in the county of recording.  A judgment may be recorded in one or more Oregon counties. Under most circumstances, the property encumbered by the judgment lien can be foreclosed, thus forcing a sale of the property to satisfy the debt due.  In Oregon, absent some other agreement of the parties, such as a specified contract rate, judgments normally bear interest at the annual rate of 9.00%, are valid for ten years, and can be renewed for another ten years, if timely re-recorded.

Judicial Foreclosure – The process whereby a lender uses the court system to foreclose out a borrower’s interest in the secured property.  This entails the filing of a complaint for foreclosure in court.  If the defendant borrower contests the foreclosure, he or she must file an “appearance” in court.  This could consist of an answer, counterclaims, or a motion.  In Oregon the vast majority of real property loans are secured by trust deeds, and therefore, most foreclosures occur non-judicially by “advertisement and sale.”  However, trust deeds may be foreclosed judicially, if the lender so decides.  A “residential trust deed” under ORS 86.705(5) that qualifies for protection against a deficiency if the foreclosure is non-judicial, still qualifies for that protection if the foreclosure is judicial.

Jumbo Loan – A loan that exceeds Fannie Mae’s and Freddie Mac’s [“GSEs”] applicable loan limits. Also known as a “non-conforming” loan.  Rates on jumbos are typically higher than rates on conforming loans. In most parts of the country, except certain areas where real estate is more expensive, the GSEs’ maximum loan is $417,000.

Junior Mortgage – A mortgage [or trust deed] that is recorded later in time than an earlier recorded mortgage or trust deed on the same property.  In Oregon, subject only to limited exceptions [such as construction liens], the time of recording determines the order of priority when multiple claims are made against the same property. The significance of being “junior” means that in the event of foreclosure by a superior lender, the holder of the junior interest could have their lien rights extinguished.  In other words, they would have no further claim against the property to satisfy the indebtedness.  This does not mean that the debt is eliminated by the loss of lien rights, but following foreclosure by the superior lien holder, the junior’s claim is no longer secured by the property. In short, it becomes “unsecured” and can be discharged by a borrower’s bankruptcy.